Question Excess Home Equity-Chapter 13

[azphoenix]

Hi Every One,

Very much appreciate this forum and everyone that contributes. I have been reading and following this for over a year, knowing that at some point I’m going to have to file Chapter 13. Unfortunately, now I wonder if I have waited to long. I live and have a home in Arizona and the last year and specially the last few months the home prices have gone up like crazy. So, I know I have excess home equity beyond the home stead exemption. My question is, when the trustee is calculating the home equity in your home, do they also consider what it takes to sell a home cost wise, closing costs/real estate agent fees etc.? Will they deduct the cost of selling a home to come up with what you would need to pay in your chapter 13 plan? There is no way I will be able to afford a Chapter 13 plan if I’m also paying the excess home equity along with Priority debt etc.

[despritfreya]

Your exemption is $250,000.00. The cost of sale is not considered when calculating the equity in the home.

You need to discuss this with an attorney. Based upon your post it appears you do not really understand how to calculating Chapter 7 reconciliation. Chapter 7 reconciliation is met when general unsecured creditors receive at least what they would have received had you filed a Chapter 7. You deduct from the value of the non-exempt assets: 1)the Chapter 7 statutory fee; and 2)the amount to be paid to priority creditors. What is left over is what has to be paid to everyone else.

Des.

[azphoenix]

Thank you Des for replying. I will be trying to file a Chapter 13 , not a Chapter 7 (not sure if that matters). I will be seeking an attorney. I just wanted to to get some clarification if Chapter 13 payment plan when you have priority debt (taxes) that will have to be paid in full and if I will also have to pay for the excess equity after home exemption. If that's the case, then I will not have enough disposable income to cover it all. And Chapter 13 would not help me. Or chapter 7 (make to much).

Yes, AZ home Exemption is $250,000. I will have beyond that with the Real Estate Market on fire right now. I would say after the home exemption it will be around $20,000 to $50,000 excess equity.

[despritfreya]

Chapter 7 Reconciliation is what is paid through the Plan in a Chapter 13.

value of non exempt assets
- what a Chapter 7 Trustee would have been entitled to if a Chapter 7 had been filed
- priority claims
='s what general unsecured creditors get through the Plan over the 3 to 5 years

Des.

[azphoenix]

Okay, that makes sense!!!

[flashoflight]

An appraisal may be worth it to get rid of a modest amount of the excess equity if you have deferred maintenance. You'd need an appraiser specifically recommended by bankruptcy attorneys so they know you are trying to lowball.

[azphoenix]

flashoflight That is great advise, didn't even think of possible deferred maintenance.